Finance

How Much Retirement Corpus You Actually Need

The corpus you need for retirement is sized backward from your desired monthly expense — inflated forward to your retirement date, then converted into a lump sum using the real (inflation-adjusted) rate of return over your expected retirement years.

Step one: inflate today's expense to retirement

For a ₹50,000 monthly expense today, 25 years from retirement, at 6% annual inflation: ₹50,000 compounds up to ₹2,14,593.54 a month by the time retirement arrives — more than four times today's figure, purely from inflation compounding over 25 years.

Step two: size a corpus that sustains that expense

Using the real rate of return (7% expected post-retirement return net of 6% inflation) and a 25-year retirement, the corpus needed to sustain ₹2,14,593.54 a month throughout retirement is ₹5,71,11,047.49.

Why the real rate of return, not the nominal rate

Using the real rate (return net of inflation) automatically keeps the monthly withdrawal's purchasing power constant throughout retirement — the corpus sizing accounts for inflation eating into returns every year of retirement, not just the years leading up to it.

Why this figure looks so much larger than a simple savings target

₹5.71 crore can look intimidating next to a ₹50,000 monthly budget, but it reflects both a quadrupled future expense and a 25-year sustaining period — a very different calculation from simply saving up a lump sum equal to a few years of today's expenses. Comparing this figure against a realistic savings projection is exactly what the companion article on closing the retirement corpus gap does next.